Next week, the Federal Reserve Board is set to meet between the 15th and the 17th to discuss the economy and if they should raise interest rates. There is not a unanimous opinion either in the marketplace, or the Fed itself regarding interest rates.
Should they choose to incrementally raise interest rates, the reaction in the market would tell us a lot about what the next big swing is going to be in stocks. I am not an economist nor do I have a crystal ball or inside track on what the Fed wants to do. What I do know is that the market will tell us what it wants to do and not the Fed. Right now, the major trend is down in all the indices and shows no real signs of reversing that trend any time soon. Continue reading "Next Week Could Change Everything"→
"In three words I can sum up everything I've learned about life: it goes on."
How true that quote is! It comes from prize winning Pulitzer poet, Robert Frost.
I think the same can be said about markets and countries: they go on.
This morning, there is hope that something can be hammered out with Greece before the week is out. I am not sure how many weeks we have been looking for a resolution to this European drama, I've just lost count. It is time for the Greeks to make a deal and for life to go on.
It seems like this weekend is crunch time for Greece and the EU. At first I thought it was inevitable that Greece would exit the euro... Now I'm not so sure and it all has to do with Face.
In Chinese culture, nothing is quite as important as the concept of Face. Face represents a person's reputation and feelings of prestige within multiple social circles, including the workplace, family, friends, and society. This perhaps is the one of the most difficult concepts for most Western societies to understand.
Gaining and losing Face is serious business and could be why the EU and Greece may resort to a Face-saving solution. Greece will get what it needs (53 to 55 billion dollars) and the EU saves Face by keeping Greece in the euro zone.
So in my opinion, the whole EU deal rests on Face and not on billions of dollars. We should see this tragic, comedy of errors play out this weekend and be settled. Certainly the markets would like that to be the case.
I learned about continuation patterns many years ago and it was an expensive lesson. Before I share that with you, let me explain to you what a continuation pattern is and what it does.
A continuation pattern is one where you have a move out of the base, which is called a breakout, and the market moves up rather sharply and then stops and move sideways. The reverse is true when a market breaks down from a top and then forms a continuation pattern to the downside. Traders in a bear market will either sell short or buy puts looking for the market to move lower.
Well, many years ago I was one of those rookie traders and it was a lesson that I've never forgotten to this day - don't try to pick tops or bottoms on continuation patterns.
Talking about a classic continuation pattern, the stock of Under Armour Inc. (NYSE:UA) broke out of a continuation pattern today. UA now looks poised to move much higher. I've talked about this stock before and pointed out that it was a continuation pattern to the upside in several of my previous videos, I hope you were able to catch the move. Certainly, the Trade Triangle technology did not miss this move and is sitting with some nice profits at the moment.
What has your experience been with continuation patterns? Do you trade them, or were you unaware of this recurring phenomenon? Either way, I would like to hear what you think. Leave your comments below this post.
Every success with MarketClub, Adam Hewison